TMI Blog2016 (8) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer also cannot be given unfettered powers, which he can exercise even beyond the reasonable period of four years. Therefore, in our view, period of four years is just and proper and the Tribunal has not committed any error while passing the impugned order. Therefore, all these appeals are dismissed. The questions posed for our consideration are answered in favour of the assessee and against the revenue. - Tax Appeal No. 1426 of 2009 Tax Appeal No. 1429 of 2009 Tax Appeal No. 2252 of 2010 - - - Dated:- 9-8-2016 - KS Jhaveri And G. R. Udhwani, JJ. For the Appellant : Mrs Mauna M Bhatt, Advocate For the Opponent : Mr BS Soparkar, Advocate for Mrs Swati Soparkar, Advocate JUDGMENT ( Per : Honourable Mr. Justice KS Jhaveri ) 1. By way of Tax Appeal Nos.1426 to 1429 of 2009, the revenue has challenged judgment and order of the Income Tax Appellate Tribunal, Ahmedabad Bench (For short, the Tribunal ) in ITA Nos.2677, 2678, 2679 3859/Ahd/2006 dated 19.12.2008, whereby the appeal filed by the revenue was dismissed and appeal filed by the assessee was allowed. By filing Tax Appeal No.2252 of 2010, the revenue has challenged the order of the Tribunal dated 9.4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the order passed by CIT (A) and thereby cancelling the order passed by the Assessing Officer u/s. 201 (1) of the I.T.Act? TAX APPEAL No.2252 of 2010 Whether the Tribunal below committed substantial error of law in directing the Assessing Officer to delete the sum of ₹ 35,77,200/- levied under Section 201 of the Income Tax Act, 1961 [ the Act ] and further sum of ₹ 3,21,948/- charged as interest under Section 201[1A] of the Act, without appreciating the fact that no period of limitation is provided in the Act for passing orders under the above sections. 4. Mr.Bhatt, learned counsel for the appellant submitted that the Tribunal has committed an error in passing the impugned orders. He submitted that the Tribunal has committed an error in relying upon the decision of the Delhi High Court while passing the impugned orders. He submitted that Punjab and Haryana High Court in the case of Commissioner of Income-Tax (TDS) v. H.M.T. Ltd. reported in [2012] 340 ITR 219 (P H) held that proceedings under Section 201 (1) and (1A) of the Act can be initiated at any time and it cannot be annulled on the ground of delay and laches. He has relied upon the observat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no provision by which the employees can directly recover these amounts. The power of computation and recovery are both vested in the Regional Provident Commissioner or other officer as provided in section 14B. Recovery is not by way of suit, initially, it was provided that the arrears could be recovered in the same manner as arrears of land revenue. But by Act 37 of 1953 Section 14B was amended providing for a special procedure under sections 8B to 8G. By Act 40 of 1973 section 11 was amended by making the amount a first charge on the assets of the establishment if the arrears of employer s contribution were for a period of more than 6 months. By Act 33 of 1988, the charge was extended to the employee s share of contribution as well. 19. In spite of these amendments, over a period of more than thirty years, the Legislature did not think fit to make any provision prescribing a period of limitation. This, in our opinion, is significant and it is clear that it is not the legislative intention to prescribe any period of limitation for computing and recovering the arrears. As the amounts are due to the Trust Fund and the recovery is not by suit, the provisions of the Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long to him at all. Such a situation cannot be compared to the above line of cases which involve prolonged suspense in regard to deprivation of property. In fact, in cases under section 14B if the Regional Provident Commissioner had made computations earlier and sent a demand immediately after the amounts fell due, the defaulter would not have been able to use these monies for his own purposes or for his business. In our opinion, it does not lie in the mouth of such a person to say that by reason of delay in the exercise of powers under section 143, he has suffered loss. On the other hand, the defaulter has obviously had the benefit of the boon of delay which is so dear to debtors , as pointed out by the Privy Council in Nagendranath Dev v. Suresh Chandra Dev [1933] ILR 60 Cal 1 (PC). In that case, it was observed that equitable considerations were out of place in matters of limitation and the strict grammatical construction alone was the guide. Sir Dinshaw Mulla stated : Nor in such a case as this is the judgment debtor prejudiced. He may indeed obtain the boon of delay, which is so dear to debtors and if he is virtuously inclined there is nothing to prevent his paying w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench, therefore, has rightly held that no limitation has been prescribed and it can be executed at any time, especially when the law of limitation for the purpose of this appeal is not there. Where there is statutory rule operating in the field, the implied power of exercise of the right within reasonable limitation does not arise. The cited decisions deal with that area and bear no relevance to the facts. (emphasise supplied by us). 16. Even if we go back earlier to the year 1984, a threejudge- Bench of the Supreme Court in the case of Ishar Singh v. Financial Commissioner reported in AIR 1984 SC 1719 by taking similar view held that no period of limitation would apply to the filing of an application under section 43 of the Pepsu Tenancy Act of 1955 since no such period was prescribed by that Act and the Limitation Act had also no application to a proceeding under the Pepsu Tenancy Act. 17. Under the Income-tax Act, there is no scope of applying the provisions of the Limitation Act as would appear from the fact that in section 260A itself, the power of condonation of delay in filing the appeal has been incorporated by the Legislature by introducing subsection (2A) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod even in the absence of any intention of the Legislature to the contrary because the attention of the Bench was not drawn to the earlier decisions of the Supreme Court of larger Bench in the cases of Uttam Namdeo Mahale v. Vithal Deo (supra) and Ishar Singh v. Financial Commissioner (Supra) indicated by us above taking a contrary view. 21. In the Case of CIT v. NHK Japan Broadcasting Corporation (supra), the Division Bench of the Delhi High Court by relying upon the decision of the Supreme Court in the case of Punjab Bhatinda District Co-operative Milk Producers Union Ltd. (supra), held that the period prescribed under sections 147 and 148 of the Act should be reasonable period of time within which the power under section 201 of the Act is required to be exercised. For the se1fsame reason of non-consideration of the decisions of the Supreme Court in the cases of Uttam Namdeo Mahale v. Vithal Deo (supra) and Ishar Singh v. Financial Commissioner (supra), we are unable to accept the said view of the Delhi High Court as a correct view. Moreover, we have already pointed out that the provisions of sections 147 and 148 of the Act deal with a situation where income escaped assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ested its liability. 5.1 He has also relied upon the decision in the case of Commissioner of Income-tax v. Satluj Jal Vidhyut Nigam Ltd. reported in [2012] 27 taxmann.com 186 (HP), wherein it is reported as under:- 7. A Division Bench of the Delhi High Court in CIT v. NHK Japan Broadcasting Corpn. (2008) 305 ITR 137 (Delhi) taking note of the judgment of the apex court in State of Punjab vs.Bhatinda District Cooperative Milk Producers Union Ltd. (2007) 9 RC 637: 2007 11 SCC 363 held that though no period of limitation is prescribed for exercising power under section 201(1) and 201(1A) of the lncometax Act, l96l, still if such power is not exercised within a reasonable period, the same would become time-barred. 8. In the case before the Delhi High Court, the assessee was a foreign company which carried on business in India. It had paid salary to its employees who were posted in India in two ways. Part of the salary was paid in lndia and part of the salary which was termed as global salary was paid in the home country of the employees. The assessee deducted tax at source in respect of the salary paid in India but did not deduct tax at source in respect of the salar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of time for initiating action, in a case where no limitation is prescribed. The rationale for this seems to be quite clear if there is a time limit for completing the assessment, then the time limit for initiating the proceedings must be the same, if not less. Nevertheless, the Tribunal has given a greater period for commencement or initiation of proceedings. We are not inclined to disturb the time limit of four years prescribed by the Tribunal and are of the view that in terms of the decision of the Supreme Court in State of Punjab v. Bhatinda District Cooperative Milk Producers Union Ltd. [2007] 9 RC 637 ; [2007] l l SCC 363, action must be initiated by the competent authority under the Income-tax Act, where no limitation is prescribed as in section 201 of the Act within that period of four years. 9. We are in respectful agreement with the judgment of the Delhi High Court since it follows the law laid down by the apex court. ........ 5.2 He has further relied upon the decision of the Bombay High Court in the case of Director of Income-tax (International taxation) v. Mahindra Mahindra Ltd. reported in [2014] 48 taxmann.com 150, wherein the Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in [2015] 64 taxmann.com 325 (Karnataka), wherein Karnataka High Court has considered its earlier decision and after considering decision of various High Court observed as under:- 20. The law provides for time limit for completion of assessments and reassessment (Section 153) which is two years from the end of the assessment year (or three years from the end of the financial year). As such, if at all the proceedings for failure to deduct or pay TDS were to be initiated, it ought to have been reasonably done within the limitation provided for completion of assessment under Section 153 of the Act. The period of assessment or reassessment under Section 147 of the Act would be a different case, as it relates to income escaping assessment and not a normal, regular assessment. It would, thus, be a special provision and would not be a guiding factor for considering reasonable period of limitation under Section 201. 21. The Delhi High Court in the case of NHK Japan Broadcasting Corpn. (supra) has considered all these aspects and then come to the conclusion, in paragraph 18 of the judgment, that three years from the end of the financial year would be a reasonable period for init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ann.com 260/204 Taxmann 667 (Kar.) has, while dealing with a similar case, held in paragraph 9 of the judgment as under: Insofar as payment of interest under S.194 A (sic 201 (1A) is concerned, the interest is payable for the period it is not paid after deduction. The principal liability of paying tax is that of the creditor and a statutory duty is cast on the debtor to deduct tax on the income of interest payable and remit the same to the company (sic-Government) irrespective of liability of the principal debtor. Unless the principal debtor (sic-creditor) files the return and pays tax, then the vicarious liability exists on the persons who should have deducted tax at source or ought to have deducted tax at source. The Revenue cannot collect tax on interest from both the principal and the agent. In that context, the order passed by the authorities holding that the assessee is liable to pay interest from the date of default till the date of order is erroneous. However, the authorities have to find out whether the creditor has filed the returns and paid the tax. If he has filed the returns and paid the tax, the liability of the assessee ceases from the day they have paid the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest. (i) at one per cent, for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted: and (ii) at one and one-half per cent, for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200: Provided that in case any person. including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso to subsection (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident. (2) Where the tax ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
